These Markets Are At Significant Levels

I’m going to
provide a bit of a longer-term view of the market based off the
weekly and daily charts. This
week we have been churning heavily under the 1053-1074 zone in the SPX, which
is critical from a weekly standpoint. Where this market moves
from here will likely be key to the weekly direction of this market going into
year-end. Until we get over this
zone, I see upside momentum in the SPX as limited.
On the other hand, should downside volume pick up then we could see a
significant retreat from these levels. As
of the moment, we are in a bit of a no-man’s land as the market tries to
figure out what it wants to do, as you can see from the range established on
the 120-minute chart:

A move over 1063 and we’ll likely see
a quick move to the upper end of the zone, at 1068-1074.
A move under 1042 and the 50-day EMA circa 1034 and rising becomes the
next likely retest level. Also
keep in mind that so far, since March, the SPX has held above the 89-day EMA
on every correction; a break of this will be a significant signal that the
weekly rally may be losing steam.

Many markets are currently at key levels.
Gold remains just under $400/oz while the dollar remains just above the
key 91.00 level. Keep an eye on
both of these, if they break through these levels together in confirmation it
will signal the likelihood of another leg down in the dollar, with 85.00
standing out as the obvious target.

In addition, ten-year bond yields are just under a weekly downtrend line that
lies circa 4.50%. As you can see
from the chart below, it appears the weekly stochastics are ready to roll
lower in the ten-year yields, so for now this downtrend line is holding well.
Any move over 4.50%, though, and bonds could be in for a renewed sell
off (remember bonds and yields move inversely).

In summary, we’re at a very interesting long-term technical juncture in
stocks, bonds, and gold/currencies. Where
they move from these levels could very well have a significant impact in the
markets going into the last two months of the year.

Have a great trading day,

Bo Harvey

bo@aspentrading.com